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The Cost of Selling a House: What to Know and How You Can Save

Selling a house is exciting, especially in a seller's market. You may be eager to cash out all that equity you've built up and put it toward a bigger home in your dream neighborhood.

Before you start making offers on a new house, it's important to know that some of those home sales proceeds won't end up in your pocket. Selling a house comes with a few major expenses, which average about 10%–15% of the sales price.

Here's a look at the most common costs of selling a house, from agent commissions to seller concessions. Some of these are optional, and some may even help you get a better offer for your home.

Real Estate Agent Commissions

Agent commissions generally represent one of your largest expenses when selling a home. This is the fee you pay to both agents — yours and the buyers — for their work in marketing and showing your home, as well as arranging the sale.

These commissions typically amount to between 5% and 6% of the sales price. In some cases, you can negotiate the rate, but this depends on the agents and brokerages involved. You could offer to do more of the work selling your home in exchange for a reduced commission. However, if you do negotiate a lower rate, be sure to get it in writing.

Taxes, Neighborhood Fees and Other Closing Costs

Government entities, homeowner's associations and other entities can also eat into sales proceeds.

Property taxes may or may not be a factor for you, but you'll usually owe a prorated amount of property taxes as a part of your closing costs. Your taxes may be lower if you already paid property taxes as part of your monthly escrow payment. If so, you could actually receive a tax rebate from the seller after closing.

Besides property taxes, some states and local municipalities also charge a real estate transfer tax. This is a fee that sellers pay to transfer the title of their home to the new owner. It's generally only a fraction of a percentage of your home's sale price, but it can reach as high as 4%. Check the laws in your area to factor in this cost.

You'll also want to consider any potential capital gains taxes and homeowner's association fees when your house sells. If you earn more than $250,000 on your home sale ($500,000 if you're married filing jointly), you'll owe capital gains taxes on the excess amount. If your home is part of a neighborhood association, you might need to negotiate with the buyer about paying membership dues for the current year.

Current Mortgage Payoff

If you still have an outstanding balance on your mortgage, that will likely be the largest line item on your list of home sale expenses. When you sell your home, your current lender will take the first cut of the proceeds to pay off your existing balance and any outstanding interest due. The leftover amount pays for other closing costs — and a down payment on your new home.

Before you start the sales process, check your current mortgage documentation to make sure it doesn't include a prepayment penalty. Most mortgages don't have these, but some charge a fee if you pay off your entire balance early — usually within three to five years. If yours includes this penalty, you'll need to account for that additional fee.

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Home Repairs

Home repairs and improvements are a key part of the process when it comes to selling your home. This comes into play when you're marketing and showing the home, as well as negotiating with the buyer.

In the marketing stage, home improvements add value to your home and help you raise the asking price. Keep in mind that some improvements will raise your home value more than others.

After your house is under contract, the seller may also ask for specific repairs. If a home inspection raises red flags, certain issues can become deal-breakers and create additional expenses for you as a seller. Some of these are negotiable, but you should expect at least a few repair requests from the buyer.

Moving Costs

Moving all your belongings into a new house isn't cheap, and it's another cost of selling a house you should consider ahead of time. Costs can vary significantly based on whether you handle all the packing and moving or hire movers to do it all. Full moving services average anywhere from $500 - $3000 for a local move, whereas costs for a long-distance move can range from $1500 - $10,000 or more depending on the size of the home and how far you’re moving.

As you're planning your home sale, don't neglect to think through the moving process. What will you have time for? How complicated will the move be? If you're moving for a job, does your employer offer relocation assistance? Your answers to questions like these will help determine the cost of your move.

Additional Costs When Selling a House

When you're considering how much it costs to sell a house, you can almost always expect to pay the above expenses. Other optional costs, like the following, might help you get more from your sale.

Pre-listing Inspection

Although a home inspection is usually a standard part of the sales process after you're under contract with a buyer, some sellers may benefit from getting an inspection before listing their home. This is a good way to learn about any major problems sooner rather than later, especially if you are selling an older house. That way, you can address any important repairs ahead of time and take those issues off the table.

A pre-listing inspection will cost you anywhere from $200 to $500 upfront. Before you get one, talk to your agent about whether it's a good idea. In some cases, a pre-listing inspection could do more harm than good. If the inspection reveals issues you're not going to address, you might legally be required to disclose them to potential buyers.

Home Warranty

A home warranty is a nice perk to offer buyers if you want something extra to ease their minds and encourage a sale. Specific terms of home warranties vary, but they're generally designed to cover any major appliance breakdowns or home system failures.

A one-year warranty costs between $350 and $600 on average. It's a small expense if it helps you speed up the sale, especially if you're selling in a buyer's market or have older appliances or home systems you don't plan to replace.

Home Staging

If you're planning on moving out before selling or you don't have the most appealing furniture and decor, you may want to consider hiring a home staging company. These interior design and layout experts help you arrange and decorate your home to make it more attractive and inviting for potential buyers.

Staging a home usually costs between $500 and $2,000, but the exact price depends on how many rooms you stage, whether you provide the furniture and how long you use the service.

Seller Concessions

Last on the list of home selling costs — and the most unpredictable — are seller concessions. This is a catch-all category for anything a buyer might ask for to seal the deal. Sellers are often expected to cover the costs of title searches and title insurance, both of which help guarantee that the buyers won't encounter any problems with their home's title. But buyers may also ask for concessions to cover other things, such as specific repairs or a portion of their closing costs.

There's usually a limit to how much buyers can ask for, and this varies by loan type. Concessions on a VA loan, for instance, can't exceed 4% of the total loan amount. Also keep in mind that you don't have to say yes to every concession. Buyers have more leverage to ask for these in a buyer's market.

How Much Does It Cost to Sell a House?

Now that we've covered all the basic costs of selling a home, let's put it all together with an example. If you sell a house for $300,000, what will your final sales proceeds be? Here's how it might break down:

Home Sale Costs Estimated Seller Expenses
Mortgage Payoff $180,000
Agent Commission(s) $18,000
Taxes and HOA Fees $2,000
Home Repairs and Improvements $5,000
Moving Costs $1,500
Home Warranty $450
Home Staging $3,000
Seller Concessions $2,000
Total Costs $211,950
Total Less Mortgage Payoff (10.7% of the sales price) $31,950
Total Net Proceeds $88,050

As you can see, home sale costs will take up a significant chunk of your equity. Remember, many of these expenses will help you get the best price for your house. Before you list your home, take the time to budget your expenses to determine where you can save and where you need to spend.

How to Save Money When Selling Your House

Not every cost of selling a home is essential, and there are ways to save. Here are a few things you can do to bring your costs down.

Do It Yourself

You can't avoid every expense when selling your home, but you can cut some by handling some aspects of the process yourself. Maybe you can skip the movers, for instance. You can also cut out a seller's agent's commission by selling the home "for sale by owner" (FSBO). Realize, though, that this may not help you overall. You may be sacrificing how much money you can profit from your home sale by not having a real estate agent.

Cut Optional Costs

Home staging, home warranties and pre-inspections are all optional. Consider skipping these activities if you're attempting to keep costs down.

Time it Right

Some of these costs will depend on the market. If you sell your home in a hot seller's market, you could have enough leverage to refuse seller concessions or any extras the buyer requests.

Selling a house can be an expensive proposition. But if you time it right and plan ahead, you could walk away with a nice down payment for your new home.

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